Short Answer
You do not need 20% down. Many first-time buyers put down 3% to 5%. FHA loans require 3.5% down. Conventional loans through Fannie Mae HomeReady or Freddie Mac HomeOne allow 3% down. VA and USDA loans allow zero down for qualified buyers. Putting less than 20% down means paying PMI, but that cost is often worth getting into a home sooner.
The 20% down payment myth keeps many qualified buyers from even starting the process. The truth is that most first-time buyers put down much less. According to the National Association of Realtors, the typical down payment for first-time buyers is 6% to 7%. With an FHA loan, you can put down 3.5% with a credit score of 580 or higher. On a $350,000 home, that is just $12,250. Conventional loans with 3% down require good credit (usually 660 or higher) but eliminate the need for FHA mortgage insurance. VA loans require zero down for qualified veterans and active duty military. USDA loans require zero down in eligible suburban and rural areas. If you put down less than 20%, you will pay monthly private mortgage insurance (PMI) or, for FHA loans, mortgage insurance premium (MIP). PMI typically costs 0.3% to 1.5% of the loan amount per year, which adds $30 to $150 per month on a $300,000 loan.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I have seen too many buyers wait years to save a 20% down payment while home prices rose faster than they could save. If you can afford the monthly payment and you plan to stay in the home for at least a few years, a lower down payment can be a smart choice. Let us talk about your financial situation and find the right down payment strategy for you. You might be closer to buying than you think.
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